Malawi launches maiden EITI report – Mining & Trade Review

…Initiative to ensure transparency and accountability in extractives sector

…This will minimize loss of revenue from the industry – Minister

By Chiku Jere

Malawi has made a giant stride towards adherence to the Extractive Industries Transparency Initiative (EITI) by officially launching its first ever EITI report signaling the country’s unwavering commitment in the implementation of the initiative, which is the global transparency and accountability standard for natural resources management and governance.

The launching ceremony, held at Bingu International Convention Centre (BICC) and presided over by the new Minister of Natural Resources, Energy and Mining, Honourable Aggrey Masi MP, follows the recent submission of the report to EITI International Secretariat in Oslo, Norway for assessment as the country guns for EITI ‘compliant status’.

A country attains EITI ‘compliant status’ upon adherence to a set of principles that compels resource-rich countries to prudently manage their natural resources for inclusive benefit among its citizenry through economic growth, sustainable development and reduction of poverty.

The 99-page report covers activities that occurred during the period between July 1, 2014 and June 30, 2015 in three sectors of Malawi’s extractives industry namely; mining, oil and gas, and forestry and details reconciliation of revenues realised from the extractive industries both by Corporate Entities and Government.

The aim of the report is to strengthen the understanding of the level of contributions of the extractive sector to the economic and social development of Malawi in order to improve transparency and good governance in all components of the extractive industry value chain.

In his speech, Masi commended President Peter Mutharika for demonstrating ‘great’ political commitment for Malawi to join the EITI by making a public declaration in his maiden state of the nation address in 2014 which culminated into the appointment of Minister of Finance Goodall Gondwe as EITI Champion.

This bold decision by the president through a public proclamation in his first state of the nation address entails the country’s commitment to transparency and accountability under his leadership,

he said.

He also commended Malawi’s EITI Multi Stakeholder Group (MSG) for ‘much progress’ registered in pursuing the EITI process ever since the State President made the commitment.

Masi hailed the group for managing to develop an effective work plan for implementing the initiative which has led to milestone achievements, among them, the successful lodging of an application for EITI candidature status for Malawi and setting up of a functional Secretariat.

The minister also singled out the establishment of a clear roadmap for facilitating beneficial ownership disclosure as another very important facet of the EITI process, which will ensure that there is no loss of revenue by government from the extractive industries through transfer pricing, money laundering and other financial crimes.

In most cases, these unfortunate activities are done by beneficial owners of companies who are usually not known and cannot be traced. In some extreme cases, these invisible owners would also finance terrorist activities, thereby jeopardizing the security of a country. I have no doubt that, if the beneficial ownership roadmap is fully implemented it would help curb such malpractices and reduce potential harmful effects on Malawi,

he said.

The minister said another milestone on the EITI process worth commending is the promulgation of the Open Data Policy which obliges information holders in the extractive industry to make information accessible.

Masi said Government’s adherence to EITI, coupled with the enactment of the Access to Information Legislation, is a clear demonstration that Malawi is committed to ensuring transparency and accountability in the extractive industry.

The minister also appreciated assistance from development partners including German, Britain and the World Bank, who have been providing financial and technical support towards the implementation of the EITI process.

German Deputy Ambassador to Malawi Thoms Staigner congratulated Malawi for what he said is a great achievement for the country.

He pointed out that natural resources offer opportunities for social, political and economic development of a country, but when there is poor governance, the same resources become a source of corruption, environmental pollution or social conflict, ending up with the poor not benefiting from the resources generated.

So it is pleasing to note that Malawi chose the path of committing to EITI which will ensure transparency and accountability in the management of natural resources, subsequently averting all the injustices,

he said.

He said he was happy that the German through GIZ and the UK through Department for International Development (DfID) were able to support Malawi’s EITI process and that the two countries have been promoting the same in other countries across the world.

Ironically, he said, Malawi is ahead of German when it comes to EITI implementation as German only got an official recognition as EITI ‘candidate’ in February 2016 and is yet to produce it first report.

Patronage at the event included a diverse of high level representation from government, the private sector, civil society, traditional leaders and mining communities.

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This piece was initially published in Malawi’s Mining & Trade Review Issue Number 52 (August 2017).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.